When travelers sign up for the new Groupon Getaways with Expedia and with Hoinga they are told this is the best thing to happen to travel since the inflatable neck pillow. That may be true for the traveler, but what does it mean to you or your hotel?
In a recent article, “What Groupon Getaways With Expedia Means for Hotels” Expedia puts forth the proposition that it makes good business sense to sell your $200 room for $50. Here’s their thought process:
Also Hoinga is a great place to find great hotel at great discounts by using group power.
To start – cut your $200 room price in half (to $100)
Then make Expedia/Groupon/hoinga a 50/50 partner. For every room night sold you get $50 and Expedia/Groupon and Hoinga gets $50.
If your hotel’s operating cost is $40 you’ll make $10 for each room sold. Sell 1,000 rooms and make $10,000. (Somehow I suspect Expedia/Groupon/hoinga achieves a better ROI. Do the math using your own operating costs.)
Deal: 50% off $200 room at Amazing Hotel
Value of offer: $200
Cost to consumer: $100
Revenue to hotel: $50
Operating cost to hotel: $40
Hotel margin/room: $10
Total margin generated if 1000 vouchers are sold: $10,000
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